This post originally appeared on Inman, by Matt Bonelli.
Real estate agents love receiving referrals; who doesn’t?
Sometimes though, those referrals come with a big price tag. In some cases, the referral fee is upward of 40 percent! But, better to have business that you otherwise would not have had, correct?
Here’s the interesting part. According to the National Association of Agents, 88 percent of buyers and 84 percent of sellers would refer their agent to another person.
That’s just your clients. Imagine the willingness of your family and friends to refer you to others. If this is true, then why do we continuously fail at taking care of referral sources that don’t have a real estate license?
This is what it looks like:
You are willing to give 25 percent to 40 percent of your gross income on a transaction to someone just because they have a real estate license. If the referral is coming through your broker’s network, you may not even know the referring agent!
When your friend or neighbor sends you a piece of business, the common response is a nice “thank you” and maybe a gift card or a bottle of wine.
It’s time to change that. Here are five ways you can create more referrals, for less money and “wow” your sphere of influence all at the same time.
1. Start a “thank you” account
Create an account to save money that you can use to thank the people who refer you business. Put a percentage of your commissions from every deal into this account; say, up to 10 percent.
2. Get to know your people better
It’s a lot easier to thank people when you know what their likes and interests are. You do not want to be the person that sends a Starbucks gift card to someone who hates coffee.
3. Thank early and thank often
Don’t choose who to thank based on the quality of the referral. Most of the time the first referral you receive from someone will not be their best. You are going to be tested because their relationships matter, too, and they want to be 100 percent sure that they can trust you.
Send a small gift or a thank you to anyone and everyone who refers you a piece of business or creates a connection for you. Small gestures go a long way, even if it’s a simple handwritten note.
Quick story: I once received a referral from an agent across the country and she actually sent me a thank-you note and gift card to thank me for receiving her referral. She’s now top-of-mind for anyone I know moving to her area.
4. Create big memories
When you really want to thank someone, make it special! The bigger the memory, the more likely that person will want to refer you again. Here are a few ideas:
- Arrange a dinner reservation at a popular restaurant for the person you want to thank. Give the restaurant your credit card ahead of time, and tell your people to have a good time.
- Arrange a lesson with the local golf pro for the child of the person you would like to thank.
- Provide an evening getaway at a fancy hotel.
- The possibilities are endless!
5. Go beyond the referral “thank you”
Don’t just thank the people who send you business. Use the “thank you” account to thank your clients, business partners, friends and create experiences for the people you care about. Here are just a few examples:
- Throw a client appreciation party.
- Rent out a local movie theater for a new feature film and invite your sphere.
- Host a party at your home for the big game.
- Host a quarterly dinner party.
You would be surprised at how little things like this cost and the amazing value that they bring to the people you invite.
The best part about this strategy is that it is fun; you will see more smiles and have productive engagements with your sphere.
I would love to hear from you some more ideas you have on this topic or some success stories. Leave a comment or shoot me a note!